HarbourVest Global Private Equity launched a tender to return up to $400 million at a 10% discount to its Sept. 30 net asset value, subject to a Nov. 16 shareholder vote. The gap with the market price is a test of how far investors trust private equity valuations.
How much is a portfolio of private equity funds worth? HarbourVest Global Private Equity's shareholders now have two answers, and they are about 19 points apart.
HVPE, a London-listed fund that invests in HarbourVest's private equity funds, published a circular on Thursday for a tender offer to return up to $400 million to shareholders. The price will be its net asset value per share at Sept. 30, less a 10% discount and the costs of the tender. Using figures as of Oct. 20, the fund put an illustrative tender price at about 40.68 pounds a share. Its shares closed that day at 32.20 pounds.
The discount, in numbers
At the illustrative price, tendering shareholders would receive about 26% more than the Oct. 20 market price. Measured against the fund's net asset value of about 45.41 pounds a share at the end of September, the market price of 32.20 pounds is about 71% of asset value, a discount of roughly 29%. The tender is set at 90%.
The tender is subject to shareholder approval at a meeting on Nov. 16. It opens Thursday and closes at 1 p.m. on Nov. 19, with shares bought on Nov. 25 and settlement on Dec. 2. Participating holders bear the costs, estimated at about 560,000 pounds.
Why now
The tender is part of a commitment to return at least $500 million to shareholders in 2026, made in connection with a continuation vote that passed at the July annual meeting with more than 98% support. Activist investors Saba and Asset Value Investors backed that vote, according to QuotedData. The board also intends to distribute about 5% to 10% of net asset value a year until the next continuation vote, due no later than July 2029. In the year to Jan. 31, the fund's discount narrowed to 26% from 35%. HVPE has called the tender the largest return of capital by a London-listed private equity fund.
Two readings
One reading is that the tender is a vote of confidence in the fund's valuations: buying back shares at 90% of asset value only makes sense for remaining holders if the assets are worth close to their marks. The other is that the price was set under activist pressure, and the market's 29% discount reflects real doubt about private equity valuations that a single tender will not erase.
How the tender is funded, whether from cash, secondary sales or borrowing, has not been disclosed. Neither has expected take-up.
What to watch
The Nov. 16 vote; take-up when the tender closes on Nov. 19; and whether the discount narrows afterward or widens again once the buyback demand is gone.